Overview: KING FEATURES SYNDICATE: Syndicating All Rights and Authorship, Too?

Hearst Holdings is a large media conglomerate based on the East Coast. Included among the many Hearst holdings is the King Features Syndicate Division, responsible for the licensing and distribution of a wide variety of features across the media universe including many of the comics you see on Sunday. In this issue we'd like to look at a syndication contract sent by King to an illustrator. The artist has been asked to produce a series of illustrations, bi-weekly, for a sports column written by someone else. The contract is basically a boilerplate, covering a broad range of King assignments. The artist did a good job of reading the contract and tried to negotiate points that were bothersome. However, King's lawyers appear to be stubborn. So we thought we'd add our voice. The Monitor would like to note that the artist was negotiating while working on the job, working without a signed contract. We worry about a scenario like this, but luckily everything turned out okay. We turned our copy of the King Contract over to Stu Rees, a legal advisor whose specialty is syndication contracts and intellectual property. For more on Stu you can visit his website at: http://www.stus.com.

STU WRITES: This "syndicate" contract is really more of an abbreviated syndicate contract. Basically, syndicate contracts are structured as a hybrid between a partnership arrangement and a literary agent contract.The artist creates the characters, the humor, and the illustrations but, in turn, owns the copyright and gets paid a percentage of income based on how well the work does, rather than a fixed amount per drawing. This King Features contract treats the artist like an employee, or a long term independent contractor, not like a partner. The artist bears no risk, gets a fixed price for the work, and has very little further profit potential. In fact this contract includes a work-for-hire-clause; the artist relinguishes authorship to the client along with all rights to the work (as opposed to where the artist owns his copyright, but transfers it to the syndicate). (More on that in a moment.)

Stu stressed the importance of convincing the client of the advantages of pro-artist changes to contracts and we agree. It is always a good idea to explain to the client the reasoning behind changes. What follows are specific clauses with questions from the artist and further commentary from Mr. Rees. We hope you can use this commentary to negotiate future contracts from with clients.

Contract Highlights:

(Note: We've capitalized words in some clauses for added emphasis.)

=>REPRINT LICENSING.

In the event YOU [the artist] INITIATE negotiations for a Reprint License which Syndicate accepts during the terms of this agreement, then Syndicate will pay you 25% of the licensee fee actually received from the Reprint Licensee. The term Reprint License shall an agreement under which a single bi-weekly release of the Commissioned Material has, after the publication date set by the Syndicate, been licensed for one-time publication in a single issue of a newspaper, magazine, or periodical...

The 25% figure is an industry standard. If the artist is acting as an agent for King then perhaps a Rep fee of 35% would be more reasonable. Just a thought! What is also odd is that King is offering incentive to the artist to relicense the work, but putting a limit on releases available to sell. This means that the artist cannot sell a collection of the work. And what about third-party sales: should the artist benefit?

The Client could respond to the artist query by rewriting the clause to allow release of more than one column at a time and amend the fee structure to reflect sales generated not only by the artist, but also by the Syndicate or a third party--a change which could make the resale royalty clause much more attractive.

STU'S ANALYSIS:

Artists should always consider negotiating for provisions where the artist gets a cut if the artist is successful in reselling his syndicated work to new markets. The point artists should make is that turning artists into advocates for their own cartoons is particularly effective because artists know their work best and often can think of innovative ways to market it. Syndicates almost always will grant the concession since they only stand to gain.

Yes, King would stand to gain. One of the roles of a syndicate is to solict and secure reprint licenses, while the role of the artist is to create works with licensing value, but not necessarily to act as sales reps. Added value should carry added incentive! Is 25% enough?

Why would King exclude multiple reprints? Stu told us that the syndicate might want to to prevent the artist from taking major sales away from the syndicate (and, in particular, from the sales staff). The artist is correct in lobbying to eliminate the single column restriction, and can even argue that it is in the syndicate's best interest since a major sale is a good thing.

This might prove to be a difficult negotiation with King, since the column contains work by both an author and an artist. The author might be working on his own resale deals including an exclusive clause with King to sell collections of the work.

Sadly, the artist would not receive a commission on the author's resale, since the sale was not initiated by the artist. Remember, the agreement is W4H. King owns all rights and is not obligated to compensate the artist forany royalties. In fact, gadflys that we are, we want to make sure our readers know that the the W4H clause allows King to resell the illustrations, with or without the author's work and with or without the artist's permission!

One last question: notice that the contract definition of Reprint License is limited: only reprints appear covered. What if an artist is able to sell a merchandiser on a concept, such as a T-shirt or mouse pad (whether based on a specific work or on the general nature of the feature)? Why not expand the clause to cover all resale potentials?

Uhmmmm, could it be because it's WORK-FOR-HIRE?

=>WORK-FOR-HIRE.

You agreed with Syndicate that the Commissioned Material shall be considered a WORK MADE FOR HIRE for King Features Syndicate, Inc...relationship with Syndicate shall be that of independent contractor...You agree that King Features Syndicate Inc. shall have ABSOLUTELY ALL RIGHTS in the Commissioned Material and the title, elements and characters included therein THROUGHOUT THE WORLD, including the right to procure copyrights and renewals and extension thereof, in its name or in the name of its designee, in the United States of America and in every other country of the world. All of said property...shall be subject to the agreement dated December 31, 1943 between said King Features Syndicate, Inc. and Syndicate. Said King Features Syndicate Inc. and Syndicate shall have all of the exclusive rights in and to the Commissioned Material that are accorded by law to the author of an original work and to the proprietor of a duly copyrighted work.

THE ARTIST ASKS:

I'm worried that the phrase"...King Features shall have absolutely all rights in the Commissioned Material and the title, elements and characters included..." would not allow me to use my drawing style for anything else. The clause also appears to bind me to an agreement made in 1943 that I have no knowledge of. (And The Monitor is worried that the artist is potentialy signing a Work-for-Hire agreement. We note that signing a W4H is always a personal choice, but is the fee you will receive worth the loss of control and future resale profit, not to mention loss of right to be called the author?)

The client could respond to the artist query by changing the clause language to reflect that rights only pertain to specific characters created by the artist for the assignment. As to the mysterious 1943 agreement, the artist may be the first person to ask to actually read the agreement. It appears that the agreement was made within King to handle copyrights among its various entities. But why is the 1943 Agreement included here and what can the artist do about it?

STU'S ANALYSIS:

King Features' inclusion of work for hire language means that King Features is treated under copyright law as the CREATOR OF THE WORK. Normally, such a provision would be a deal-breaker in a syndication contract since the artist creates and owns the characters. Here, however, the artist is illustrating the work of someone else and receiving a guaranteed payment. So King might feel granting full ownership to the syndicate is fair and would clearly be an absolute requirement by the Syndicate.

(Well, King may think that this provision is fair, however, The Monitor cautions readers against accepting work-for-hire situations. Instead opt for granting specific copyright usage and re-use rights.) When King claims all rights in the work provided under the contract, including characters, there is probably some room for argument over what constitutes a character as opposed to what is a general drawing style.

In order to reduce the possibility of a disagreement, that particular sentence should be revised to include the following text:

"You agreed that King Features Syndicate, Inc. shall have all rights in the Commissioned Material and the title, element and characters included (but not to the general artistic style).

Regarding the reference to the 1943 agreement: since the Syndicate is reluctant to provide the agreement to artists, a disclaimer is called for to ensure that the artist is not granting more rights than what is readily known.

Here's what Stu suggested. The second to last sentence of the paragraph should be revised to include the following text:

"...and Syndicate, but nothing in said agreement shall expand the rights granted by you beyond those enumerated in this Agreement."

=>CONTRACT RENEWAL

You hereby give Syndicate two (2) options to renew this Agreement for two (2) additional terms of two (2) years each UPON THE SAME TERMS AND CONDITIONS. The option as to said renewal terms shall be exercisable by Syndicate giving you written notice at least thirty (30) days prior to the expiration of the then current terms.

THE ARTIST ASKS:

If I'm giving King two options to renew for two additional terms of two years each "upon the same terms and conditions," am I also held to the same pay scale each time? I would hope there would be some allowance for an increase! Also, if the renewals are under the same terms and conditions, aren't the two year options part of those conditions? Can we take out the clause and simply renegotiate at the end of two years?

STU's ANALYSIS:

King Features needs a long term contract to create some stability, to lock in a good artist at a low pay rate, and to prevent the need for frequent re-negotiations. It is fair to give the syndicate the stability it wants, but there should be an adjustment to the pay scale.

This can be achieved by adding the following text:

"...same terms and conditions, subject to a mutually agreeable revision to the payment due under Paragraph 4(a)."

The above language limits the negotiations to just dollars. The Syndicate may not accept this formulation since the artist has no absolute requirement to agree. So, Stu, what else can you do? A reasonable middle ground would be to identify a pay raise with options: such as $XXX per week during option 1 and $XXX per week during option 2.

=>FAILURE TO DELIVER.

In the event that you (artist) fail to deliver the Commission Material provided for, you expressly agreed and covenanted, that...you will deliver or cause to be delivered...ALL OF THE COMMISSIONED MATERIAL herein provided for before you do any work for or furnish or cause to be furnished any literary or artistic material to any other person or party.

And...:

In the event you fail to deliver the finished art work at least ten (10) weeks before publication then

(a) Syndicate shall have the right, among others, to have any and all such material prepared for the balance of this Agreement by substitute(s) of the Syndicate's selection, and

(b) Syndicate shall have all rights in any and all materials so prepared,and

(c) Syndicate shall have the right to deduct from any and all monies due you all of Syndicate's actual costs and expenses incurred in having such materials prepared for it by substitute(s) and have the same delivered to it.

Should you fail at any time during the term of this Agreement to deliver the material at the time called for herein...

These clauses carry the most severe wording in the contract, wording which left the artist extremely worried.

THE ARTIST QUERIED:

Is this a non-compete clause? Am I agreeing not to do any artwork for anyone else before I do my weekly assignment? If so, this seems unfair. I have no intention of failing to deliver, but if I do these drastic consequences seem unnecessary.

The clause certainly could be read as a No-Compete Clause. Let's look at the clause in context. The Syndicate seems to want assurances, that the artist will not take other jobs that would conflict with meeting obligations to King. Does King accomplish anything with intimidating language which alienates the artist? We understand that the artist's failure to deliver carries very severe consequences to King which is under contract to deliver in a timely fashion to its clients. Still, the client assumes that they can control the workflow in the artist's studio, which is a wrong-headed assumption. As long as the work is completed and delivered on time the terms of the contract should be considered satisfied.

MORE INSIGHT FROM STU:

The first paragraph is very strict. King Features realizes that the artist will have other illustration work, and they may fear that the artist may fail to deliver if the other work is more lucrative. Under the provision, the artist can juggle other work. In the event that the artist ever misses his deadline schedule, however, the artist must forsake all other work until he has finished ALL work under the King Features contract.

ALL WORK! This provision is so harsh that it is likely that the person writing it did not realize its severity. What would be a reasonable compromise, is to require that the artist bring his work current before working on other projects.

This revision could be accomplished by adding the following language to the end of the paragraph:

"...or party until you are brought current with the Syndicate's delivery schedule."

STU ADDS:

The second paragraph reserves certain remedies to King Features in the event that the artist fails to deliver. Strong measures include the right to fire the artist and to have others prepare the work. With typical syndicate contacts such provisions are unacceptable since the artist is the copyright owner and co-venturer. Here, the syndicate and artist have what amounts to an employer/employee relationship.

Therefore, there should be a provision that limits King Features to, at worst, firing the artist, instead of also billing the artist for additional expernses beyond the loss of revenue to the artist.

Such a limitation might look like this text, inserted at the end of the first sentence:

"...delivered to it, but you [the artist] shall not be responsible for any costs, expenses or damages exceeding amounts due to you under this contract."

As mentioned earlier, Stu also recommends changing the contract payment schedule from "due upon publication" (which is ten weeks after the delivery of the work) to "due upon acceptance." This has the obvious advantage of providing for payment ten weeks earlier, but it also means that the syndicate would have ten less weeks of payments that it can withhold if the artist fails to deliver.

What if the syndicate decides not to publish at all? Hmmm, another reason to negotiate for payment "due upon acceptance."

CREDIT WHERE CREDIT IS DUE...

Stu also points out that the contract does not obligate King to provide a written credit for the artist. Why no obligation? The Syndicate is considered the legal author under the work-for-hire doctrine (another reason not to sign W4H agreements). But artists expect credit as a matter of course. In fact credits are good advertising. So....negotiate!

Provide the following provision, inserted as a new paragraph:

"Syndicate shall include with each installment the following credit: Illustrations by [artist]. Also, Syndicate will not alter artist signature of the artwork."

LAST, BUT NOT LEAST

In closing Stu also advocated changing the following warranty and indemnity clause. Warranty/Indemnity Clauses define legal responsibilities and methods of dispute resolution between the two signing parties. To "indemnify" means to provide legal exemption from penalties or liabilities incurred by one's (in this case the artist's) actions.

=>WARRANTY/INDEMNITY

You [the artist] warrant that all Commissioned Material delivered hereunder will be new and original, free from plagiarized, defamatory, copyright infringing or otherwise unlawful matter, or matter volatile of the rights of third parties and you agreed to indemnify Syndicate and King Features Syndicate, Inc. from all loss, liability, damage and expenses arising out of the breach or ALLEGED BREACH of any of said warranties.

STU'S ANALYSIS:

This provision is rather typical. Syndicates need such language to protect themselves from lawsuits, which can happen very easily if the artist uses other people's work or says untrue things. The point worth negotiating is the inclusion of indemnity for "ALLEGED BREACH" of warranties. Such language allows the syndicate to trigger the indemnity whether or not the artist is shown to have actually infringed on someone's rights.

(The Monitor thinks that this sounds like the artist is guilty without a trial.)

From the syndicate's perspective, such a provision is helpful because almost all lawsuits settle. From the artist's standpoint, this allowance is a financial nightmare because the syndicate's incentive is to settle no matter what. For example, why would the syndicate fight a $5,000 claim when it could just force the artist to pick up the tab? The best counterproposal is to strike out the alleged breach language.

Updated News: [No comment from King Features has been received regarding their contract as of publication date]